Higher bauxite sourcing helps Vedanta cut alumina-making cost by 8%

Higher sourcing of bauxite from local supplies helped Vedanta to prune cost of making alumina at its Lanjigarh refinery by 8 per cent year-on-year (y-o-y) to $269 per tonne in Q3 of this fiscal.

Alumina production at Lanjigarh was up 16 per cent y-o-y to 476,000 tonnes. Lower alumina costs also led to cut in Cost of Production (CoP) of aluminium at $1691 per tonne. Vedanta Ltd said at a recent investor presentation that local bauxite was now meeting over half of the company's total requirement.

During April-December 2019, output at Lanjigarh refinery was up 24 per cent to reach 1.33 million tonne (MT) whereas the cost of production was down 16 per cent y-o-y at $281 per tonne. Pursuant to falling alumina costs and structural cost reduction measures embarked on by Vedanta, aluminium CoP during this period fell 12 per cent to $1769 per tonne.

Vedanta plans to enhance coal linkages through participation in Tranche V and VI coal auctions. It is eyeing coal security of 90 per cent, up from 72 per cent now. The company is also attaching thrust on ramp up of the Lanjigarh alumina refinery in a staggered manner. In the first phase, capacity of the refinery will be scaled up to 2.7 million tonne per annum (mtpa) with medium term expansion to 6 mtpa. The ultimate capacity of the alumina refining unit is envisaged at 6 mtpa.

On bauxite sourcing, Vedanta is making continuous efforts to step up output from its captive mine. Besides, efforts are on to ramp up supplies from Kodingamali bauxite mine in Odisha under the leasehold of Odisha Mining Corporation (OMC). It is also looking to explore new resources under the New Mineral Policy. 

To cut down on logistics costs, Vedanta is shifting focus from road to rail. For streamlining procurement efficiencies, the company has struck strategic partnerships with key supplies besides entering into long-term contracts.